ASSURED GUARANTY LTD

Reconciliation of Net Income (Loss) Attributable to AGL

to Adjusted Operating Income (Loss)

The table below presents the components of net realized investment gains (losses).

The change in the allowance for credit losses for 2025 was primarily associated with CLO equity tranches and Loss Mitigation Securities. The change in the allowance for credit losses for 2024 was primarily related to Loss Mitigation Securities.

Non-Credit Impairment-Related Unrealized Fair Value Gains (Losses) on Credit Derivatives

Changes in the fair value of credit derivatives occur because of changes in the Company’s own credit rating and credit spreads, collateral credit spreads, notional amounts, credit ratings of the referenced entities, expected terms, realized gains (losses) and other settlements, interest rates and other market factors. The components of changes in fair value of credit derivatives related to credit derivative revenues and changes in expected losses are included in Insurance segment results. Non-credit impairment-related changes in unrealized fair value gains and losses on credit derivatives are not included in the Insurance segment measure of adjusted operating income because they do not represent actual claims or losses and are expected to reverse to zero as the exposure approaches its maturity date. Changes in the fair value of the Company’s credit derivatives that do not reflect actual or expected claims or credit losses have no impact on the Company’s statutory claims-paying resources, rating agency capital or regulatory capital positions. Unrealized gains (losses) on credit derivatives may fluctuate significantly in future periods. Except for underlying credit impairment, which is recognized as loss expense in the Insurance segment, the fair value adjustments on credit derivatives in the insured portfolio are non-economic adjustments that reverse to zero over the remaining term of that portfolio. See Item 8. Financial Statements and Supplementary Data, Note 9. Fair Value Measurement, for additional information.

During 2025, non-credit impairment-related unrealized fair value gains of $6 million were primarily due to generally lower collateral asset spreads. During 2024, non-credit impairment-related unrealized fair value gains of $14 million were generated primarily due to the termination of certain structured finance policies and generally lower collateral asset spreads.

Fair Value Gains (Losses) on CCS

Fair value gains on CCS of $20 million in 2025 were primarily due to changes in the rate environment and market view on liquidity of floating rate instruments. Fair value losses on CCS of $10 million in 2024 were primarily due to a tightening in market spreads. Fair value gains (losses) on CCS are heavily affected by, and in part fluctuate with, changes in market credit spreads and interest rates, and other market factors and are not expected to result in an economic gain or loss. See Item 8. Financial Statements and Supplementary Data, Note 9. Fair Value Measurement.

Foreign Exchange Gains (Losses) on Remeasurement

Foreign exchange gains of premiums receivable and loss and LAE reserves of $85 million, losses of $26 million and gains of $51 million in 2025, 2024 and 2023, respectively, primarily relate to remeasurement of long-dated premiums receivable, for which the Company records the present value of future installment premiums. Foreign exchange gains and losses are mainly due to changes in the exchange rate of the pound sterling and, to a lesser extent, the euro relative to the U.S. dollar. Approximately 68% and 69% of gross premiums receivable, net of commissions payable as of December 31, 2025 and December 31, 2024, respectively, are denominated in currencies other than the U.S. dollar. Premiums on European infrastructure and structured finance transactions typically are paid, in whole or in part, on an installment basis, whereas premiums on U.S. public finance transactions are often paid upfront.

The following table presents the foreign exchange rates as of the balance sheet dates.

Foreign Exchange Rates

U.S. Dollar Per Foreign Currency